What does “first-time homebuyer” mean?
You usually qualify if you have not owned a home in the past 4 years and the property will be your primary residence. This rule applies even if you owned property elsewhere in the world.
First Home Savings Account (FHSA) – Save faster and pay less tax
You can open an FHSA to save for a down payment with tax advantages:
- Contributions may reduce your taxable income.
- Investment growth inside the account is tax-free.
- Withdrawals to buy your first home are tax-free.
- Annual limit is $8 000, and lifetime limit is $40 000 per person.
You can hold the account for up to 15 years or until age 71. If you don’t buy a home, you can transfer funds to another retirement account without penalty.
Home Buyers’ Plan (HBP) – Use your RRSP for a down payment
Under the Home Buyers’ Plan:
- You can withdraw up to $60 000 from your Registered Retirement Savings Plan (RRSP) to buy or build a home.
- Withdrawals are tax-free at the time.
- You have up to 15 years to repay the amount into your RRSP.
- You must start repayments after a grace period, usually two years.
This helps you strengthen your down payment quickly without paying tax up front.
First Time Home Buyers’ Tax Credit – Lower your tax bill
You can claim the Home Buyers’ Tax Credit when you file your tax return in the year you buy. It provides up to $1 500 as a non-refundable credit.
A non-refundable credit lowers the tax you owe, which can offset some closing costs like legal fees.
Land transfer tax rebates – Save on closing costs
Many provinces and cities offer rebates on the land transfer tax you pay when you buy:
- Ontario: rebate up to $4 000.
- British Columbia: rebate up to $8 000 on homes under certain price limits.
- Prince Edward Island: rebate up to $2 000.
- Toronto (municipal): additional rebate up to $4 475 on top of provincial rebate.
These amounts reduce the tax you owe at closing. You must apply and meet eligibility rules.
GST/HST rebates on new homes
If you buy a newly built home or substantially renovated property, you may qualify for a rebate on the GST or HST you paid.
The rebate can cut thousands off the cost, depending on the price and taxes paid. Provincial portions may also apply.
Programs no longer available
The shared equity homebuyer incentive, which provided a percentage of your purchase price, ended in March 2024. It’s no longer available.
This means you can’t apply for that particular program now, though you may have seen older references to it.
Tips on using incentives together
You can combine many of these:
- Save in an FHSA while also building your RRSP for a larger HBP draw.
- Apply for land transfer tax rebates and claim your tax credit in the year you buy.
- If you’re buying a new home, check if GST/HST rebates apply.
Each program has specific eligibility and timing rules, so check the current details before you sign an offer or withdraw funds.
There are several ways to reduce the cost of buying your first home. You don’t have to pick just one. If you’re not sure which applies to your situation, speaking to a mortgage professional can help you plan and maximize the incentives available to you.
